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Press release from Business Wire

The Washington Post Company Reports Third Quarter Earnings

Friday, November 01, 2013

The Washington Post Company Reports Third Quarter Earnings

08:30 EDT Friday, November 01, 2013

WASHINGTON (Business Wire) -- The Washington Post Company (NYSE: WPO) today reported income from continuing operations attributable to common shares of $56.0 million ($7.53 per share) for the third quarter of 2013, compared to $56.3 million ($7.58 per share) for the third quarter of 2012. Net income attributable to common shares was $30.1 million ($4.05 per share) for the third quarter ended September 30, 2013, compared to $93.8 million ($12.64 per share) for the third quarter of last year. Net income includes $25.9 million ($3.48 per share) in losses and $37.5 million ($5.06 per share) in income from discontinued operations for the third quarter of 2013 and 2012, respectively (refer to “Discontinued Operations” discussion below).

On October 1, 2013, the Company completed the sale of most of its newspaper publishing businesses, including The Washington Post. Consequently, the Company's income from continuing operations for the third quarter and year-to-date periods excludes these sold businesses, which have been reclassified to discontinued operations for all periods presented.

The results for the third quarter of 2013 and 2012 were affected by a number of items as described in the following paragraphs. Excluding these items, income from continuing operations attributable to common shares was $54.0 million ($7.26 per share) for the thirdquarter of 2013, compared to $57.0 million ($7.69 per share) for the third quarter of 2012. (Refer to the Non-GAAP Financial Information schedule at the end of this release for additional details.)

Items included in the Company's income from continuing operations for the third quarter of 2013:

  • $4.0 million in severance and restructuring charges at the education division (after-tax impact of $3.1 million, or $0.42 per share); and
  • $7.9 million in non-operating unrealized foreign currency gains (after-tax impact of $5.0 million, or $0.69 per share).

Items included in the Company's income from continuing operations for the third quarter of 2012:

  • $4.3 million in severance and restructuring charges at the education division (after-tax impact of $2.7 million, or $0.37 per share); and
  • $3.1 million in non-operating unrealized foreign currency gains (after-tax impact of $1.9 million, or $0.26 per share).

Revenue for the third quarter of 2013 was $902.5 million, up 3% from $877.6 million in the third quarter of 2012. The Company reported operating income of $81.9 million in the third quarter of 2013, compared to operating income of $93.2 million in the third quarter of 2012. Revenues increased at the cable television division and in other businesses, offset by declines at the television broadcasting and education divisions. Operating results declined at the television broadcasting division and declined very slightly at the cable television division, offset by improved results at the education division.

For the first nine months of 2013, the Company reported income from continuing operations attributable to common shares of $134.3 million ($18.07 per share), compared to $122.1 million ($16.17 per share) for the first nine months of 2012. Net income attributable to common shares was $79.5 million ($10.70 per share) for the first nine months of 2013, compared to $176.7 million ($23.39 per share) for the same period of 2012. Net income includes $54.7 million ($7.37 per share) in losses and $54.5 million ($7.22 per share) in income from discontinued operations for the first nine months of 2013 and 2012, respectively (refer to “Discontinued Operations” discussion below). As a result of the Company's share repurchases, there were 3% fewer diluted average shares outstanding in the first nine months of 2013.

The results for the first nine months of 2013 and 2012 were affected by a number of significant items as described in the following paragraphs. Excluding these items, income from continuing operations attributable to common shares was $153.3 million ($20.69 per share) for the first nine months of 2013, compared to $122.3 million ($16.20 per share) for the first nine months of 2012. (Refer to the Non-GAAP Financial Information schedule at the end of this release for additional details.)

Items included in the Company's income from continuing operations for the first nine months of 2013:

  • $18.3 million in severance and restructuring charges at the education division (after-tax impact of $13.1 million, or $1.79 per share); and
  • $9.4 million in non-operating unrealized foreign currency losses (after-tax impact of $6.0 million, or $0.83 per share).

Items included in the Company's income from continuing operations for the first nine months of 2012:

  • $9.3 million in severance and restructuring charges at the education division (after-tax impact of $5.8 million, or $0.78 per share);
  • a $5.8 million gain on the sale of a cost method investment (after-tax impact of $3.7 million, or $0.48 per share); and
  • $3.2 million in non-operating unrealized foreign currency gains (after-tax impact of $2.0 million, or $0.27 per share).

Revenue for the first nine months of 2013 was $2,628.9 million, up 3% from $2,559.7 million in the first nine months of 2012. Revenues increased at the cable television division and in other businesses, offset by declines at the television broadcasting and education divisions. The Company reported operating income of $240.0 million for the first nine months of 2013, compared to $202.1 million for the first nine months of 2012. Operating results improved at the education and cable television divisions, offset by a decline at the television broadcasting division.

Division Results

Education

Education division revenue totaled $546.5 million for the third quarter of 2013, a 1% decline from revenue of $551.7 million for the third quarter of 2012. Kaplan reported third quarter 2013 operating income of $17.0 million, compared to $14.7 million in the third quarter of 2012.

For the first nine months of 2013, education division revenue totaled $1,622.5 million, a 2% decline from revenue of $1,650.2 million for the same period of 2012. Kaplan reported operating income of $36.7 million for the first nine months of 2013, compared to operating income of $6.5 million for the first nine months of 2012.

In response to student demand levels, Kaplan has formulated and implemented restructuring plans at its various businesses, with the objective of establishing lower cost levels in future periods. Across all businesses, restructuring costs totaled $4.0 million and $18.3 million in the third quarter and first nine months of 2013, respectively, compared to $4.3 million and $9.3 million in the third quarter and first nine months of 2012, respectively. In conjunction with completing these restructuring plans at Kaplan Higher Education (KHE) and Kaplan International, Kaplan currently plans to incur approximately $5.0 million in additional restructuring costs for the remainder of 2013. Kaplan may also incur additional restructuring charges in 2013 as Kaplan management continues to evaluate its cost structure.

A summary of Kaplan's operating results for the third quarter and the first nine months of 2013 compared to 2012 is as follows:

             
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)   2013     2012     % Change   2013     2012     % Change  
Revenue
Higher education $ 266,061 $ 273,703 (3 ) $ 811,013 $ 872,948 (7 )
Test preparation 77,431 81,151 (5 ) 232,064 223,767 4
Kaplan international 201,305 194,158 4 574,086 546,862 5
Kaplan corporate and other 2,223 3,809 (42 ) 6,496 10,283 (37 )
Intersegment elimination   (568 )     (1,125 )   (1,162 )     (3,705 )
$ 546,452     $ 551,696   (1 ) $ 1,622,497     $ 1,650,155   (2 )
Operating Income (Loss)
Higher education $ 14,719 $ 1,510 $ 42,354 $ 16,329
Test preparation 3,820 3,446 11 7,306 (4,067 )
Kaplan international 12,020 20,365 (41 ) 24,907 34,293 (27 )
Kaplan corporate and other (13,680 ) (10,852 ) (26 ) (38,243 ) (40,628 ) 6
Intersegment elimination   156       224     381       579  
$ 17,035     $ 14,693   16 $ 36,705     $ 6,506  
 

KHE includes Kaplan's domestic postsecondary education businesses, made up of fixed-facility colleges and online postsecondary and career programs. KHE also includes the domestic professional training and other continuing education businesses.

In 2012, KHE began implementing plans to close or merge 13 ground campuses, consolidate other facilities and reduce its workforce. In connection with these and other plans, KHE incurred $2.5 million and $14.1 million in total restructuring costs in the third quarter and first nine months of 2013, respectively, compared to $2.7 million and $6.5 million in severance and restructuring costs for the third quarter and first nine months of 2012, respectively. For the third quarter of 2013, these costs included accelerated depreciation ($0.8 million), severance ($1.6 million) and lease obligation losses ($0.1 million). For the first nine months of 2013, these costs included accelerated depreciation ($5.8 million), severance ($3.0 million), lease obligation losses ($4.4 million) and other items ($0.9 million). In the first nine months of 2013, ten KHE campuses were closed. For the third quarter and first nine months of 2012, restructuring costs were mostly severance, but also included $0.6 million in accelerated depreciation.

In the third quarter and first nine months of 2013, higher education revenue declined 3% and 7%, respectively, due largely to declines in average enrollments that reflect weaker market demand over the past year and the impact of campuses in the process of closing.

KHE operating income increased significantly in the third quarter and first nine months of 2013, due largely to expense reductions associated with lower enrollments and recent restructuring efforts.

New student enrollments at KHE declined 7% and 1% in the third quarter and first nine months of 2013, respectively. New student enrollments were down due to the impact of closed campuses and those planned for closure that are no longer recruiting students, offset by the positive impact of trial period modifications and process improvements.

Total students at September 30, 2013, were down 11% compared to September 30, 2012, but increased 5% compared to June 30, 2013. Excluding campuses closed or planned for closure, total students at September 30, 2013, were down 7% compared to September 30, 2012, but up 5% compared to June 30, 2013. A summary of student enrollments is as follows:

 
Students as of
September 30,   June 30,   September 30,
    2013   2013   2012
Kaplan University 46,340 43,601 49,132
Other Campuses 18,818   18,591   24,129
65,158   62,192   73,261
 
Students as of
September 30, June 30, September 30,
(excluding campuses closing)   2013   2013   2012
Kaplan University 46,340 43,601 49,132
Other Campuses 18,619   18,181   21,066
64,959   61,782   70,198
 

Kaplan University and Other Campuses' enrollments at September 30, 2013 and 2012, by degree and certificate programs, are as follows:

  As of September 30,
    2013   2012
Certificate 21.3 %   23.6 %
Associate's 30.8 % 30.7 %
Bachelor's 32.6 % 32.7 %
Master's 15.3 %   13.0 %
100.0 %   100.0 %
 

Kaplan Test Preparation (KTP) includes Kaplan's standardized test preparation programs. KTP revenue declined 5% for the third quarter of 2013, but increased 4% for the first nine months of 2013. Enrollment declined 8% and 2% for the third quarter and first nine months of 2013, respectively, due to declines in graduate programs, offset by growth in nursing and bar review programs. KTP operating results improved in the first nine months of 2013 due largely to increased revenues.

Kaplan International includes English-language programs and postsecondary education and professional training businesses outside the United States. Kaplan International revenue increased 4% and 5% in the third quarter and first nine months of 2013, respectively, due to enrollment growth in the pathways, English-language and Singapore higher education programs. Kaplan International operating income declined in the third quarter of 2013 due to reduced earnings in professional training, and increased investment to support growth in English-language and Singapore higher education programs. For the first nine months of 2013, operating income declined due to reduced earnings in professional training, and increased investment to support growth in English-language programs, offset by better results in Singapore. The results in Australia included restructuring costs of $1.5 million and $4.1 million for the third quarter and first nine months of 2013, respectively, compared to $1.0 million in the third quarter and first nine months of 2012. In the third quarter and first nine months of 2012, respectively, Kaplan International results benefited from a $2.0 million and $3.9 million favorable adjustment to certain items recorded in prior periods.

Corporate represents unallocated expenses of Kaplan, Inc.'s corporate office, other minor businesses and certain shared activities.

Cable Television

Cable television division revenue increased 1% in the third quarter of 2013 to $202.4 million, from $199.6 million for the third quarter of 2012; for the first nine months of 2013, revenue increased 4% to $607.1 million, from $585.4 million in the same period of 2012. The revenue increase for the first nine months of 2013 is due to recent rate increases for many subscribers, growth in commercial sales and a reduction in promotional discounts. The increase was partially offset by a decline in basic video subscribers, as the cable division focuses its efforts on churn reduction and retention of its high-value subscribers.

Cable television division operating income declined slightly in the third quarter of 2013 to $39.7 million, from $39.9 million in the third quarter of 2012; for the first nine months of 2013, operating income increased 9% to $121.0 million, from $111.1 million for the first nine months of 2012. The division's operating income improved in the first nine months of 2013 due to increased revenues, partially offset by higher programming and depreciation costs.

At September 30, 2013, Primary Service Units (PSUs) were down 3% from the prior year due to a decline in basic video subscribers. A summary of PSUs is as follows:

    As of September 30,
      2013   2012
Basic video 561,119   605,057
High-speed data 469,296 462,808
Telephony 182,643   185,647
1,213,058   1,253,512
 

Television Broadcasting

Revenue at the television broadcasting division declined 18% to $87.1 million in the third quarter of 2013, from $106.4 million in the same period of 2012; operating income for the third quarter of 2013 was down 33% to $36.3 million, from $54.1 million in the same period of 2012. For the first nine months of 2013, revenue declined 4% to $271.7 million, from $283.5 million in the same period of 2012; operating income for the first nine months of 2013 was down 7% to $119.4 million, from $128.8 million in the same period of 2012.

The decline in revenue and operating income is due to a $15.9 million and $24.1 million decrease in political advertising revenue in the third quarter and first nine months of 2013, respectively, and $10.8 million in incremental summer Olympics-related advertising at the Company's NBC affiliates in the third quarter of 2012. The decline in revenue and operating income was partially offset by incremental advertising revenue from the NBA finals broadcast at the division's ABC affiliates in Miami and San Antonio, and increased retransmission revenues.

Other Businesses

Other businesses includes the operating results of Social Code, a marketing solutions provider helping companies with marketing on social media platforms; Celtic Healthcare, a provider of home health care and hospice services in the northeastern and mid-Atlantic regions, acquired by the Company in November 2012; Forney, a global supplier of products and systems that control and monitor combustion processes in electric utility and industrial applications, acquired by the Company in August 2013; and WaPo Labs, a digital team focused on emerging technologies and new product development. Also included are the Slate Group and the FP Group, previously included as part of the Company's newspaper publishing division.

The revenue increase in other businesses for the first nine months of 2013 is primarily due to growth at Social Code and Slate, and revenue from the Company's recently acquired Celtic Healthcare and Forney businesses.

Corporate Office

Corporate office includes the expenses of the Company's corporate office as well as a net pension credit.

Equity in Earnings (Losses) of Affiliates

The Company holds a 16.5% interest in Classified Ventures, LLC and interests in several other affiliates.

The Company's equity in earnings of affiliates, net, was $5.9 million for the third quarter of 2013, compared to $4.1 million for the third quarter of 2012. For the first nine months of 2013, the Company's equity in earnings of affiliates, net, totaled $13.2 million, compared to $11.3 million for the same period of 2012.

Other Non-Operating Income (Expense)

The Company recorded other non-operating income, net, of $8.1 million for the third quarter of 2013, compared to $4.2 million for the third quarter of 2012. The third quarter 2013 non-operating income, net, included $7.9 million in unrealized foreign currency gains and other items. The third quarter 2012 non-operating income, net, included $3.1 million in unrealized foreign currency gains and other items.

The Company recorded non-operating expense, net, of $8.8 million for the first nine months of 2013, compared to other non-operating income, net, of $12.1 million for the same period of the prior year. The 2013 non-operating expense, net, included $9.4 million in unrealized foreign currency losses, offset by other items. The 2012 non-operating income, net, included a $7.3 million gain on sales of cost method investments, $3.2 million in unrealized foreign currency gains and other items.

Net Interest Expense

The Company incurred net interest expense of $8.6 million and $25.6 million for the third quarter and first nine months of 2013, respectively, compared to $8.1 million and $24.4 million for the same periods of 2012. At September 30, 2013, the Company had $451.1 million in borrowings outstanding, at an average interest rate of 7.0%.

Provision for Income Taxes

The effective tax rate for income from continuing operations for the first nine months of 2013 was 38.1%, compared to 38.8% for the first nine months of 2012.

Discontinued Operations

On August 5, 2013, the Company announced that it had entered into an agreement to sell its Publishing Subsidiaries that together conducted most of the Company's publishing businesses and related services, including publishing The Washington Post, Express, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times and El Tiempo Latino and related websites. Slate magazine, TheRoot.com and Foreign Policy are not part of the transaction and remain with The Washington Post Company, as do the WaPo Labs and SocialCode businesses, the Company's interest in Classified Ventures and certain real estate assets, including the headquarters building in downtown Washington, DC. On October 1, 2013, the Company completed the sale. Consequently, the Company's income from continuing operations excludes these sold businesses, which have been reclassified to discontinued operations, net of tax, for all periods presented.

The Purchaser acquired all the issued and outstanding equity securities of the Publishing Subsidiaries for $250 million, subject to customary adjustments for cash, debt and working capital at closing. The Company will not record the gain on the sale until the fourth quarter of 2013; however, the Company recognized $28.4 million (after-tax impact of $18.3 million) in expenses related to the sale that are included in discontinued operations in the third quarter of 2013. These costs include the net impact of accelerated vesting provisions and forfeitures of restricted stock awards and stock options that were made in contemplation of the sale, and certain other transaction-related expenses. Also included in discontinued operations is $22.7 million (after-tax basis of $14.5 million) in early retirement program expense for the first nine months of 2013, and $7.5 million (after-tax basis of $4.6 million) and $8.5 million (after-tax basis of $5.3 million) for the third quarter and first nine months of 2012, respectively.

In March 2013, the Company sold The Herald. Kaplan sold Kidum in August 2012, EduNeering in April 2012 and Kaplan Learning Technologies (KLT) in February 2012. The Company divested its interest in Avenue100 Media Solutions in July 2012. Consequently, the Company's income from continuing operations also excludes the operating results and related net gains on disposition of these businesses, which have been reclassified to discontinued operations, net of tax.

Earnings (Loss) Per Share

The calculation of diluted earnings per share for the third quarter and first nine months of 2013 was based on 7,336,752 and 7,315,971 weighted average shares outstanding, respectively, compared to 7,376,255 and 7,507,946, respectively, for the third quarter and first nine months of 2012. At September 30, 2013, there were 7,423,913 shares outstanding and the Company had remaining authorization from the Board of Directors to purchase up to 180,993 shares of Class B common stock.

Forward-Looking Statements

This report contains certain forward-looking statements that are based largely on the Company's current expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. For more information about these forward-looking statements and related risks, please refer to the section titled “Forward-Looking Statements” in Part I of the Company's Annual Report on Form 10-K.

 
THE WASHINGTON POST COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
       
Three Months Ended
September 30, %
(in thousands, except per share amounts)   2013     2012       Change
Operating revenues $ 902,479 $ 877,637 3
Operating expenses (762,136 ) (721,723 ) 6
Depreciation of property, plant and equipment (55,633 ) (57,588 ) (3 )
Amortization of intangible assets   (2,837 )     (5,090 ) (44 )
Operating income 81,873 93,236 (12 )
Equity in earnings of affiliates, net 5,892 4,099 44
Interest income 642 648 (1 )
Interest expense (9,221 ) (8,738 ) 6
Other income, net   8,110       4,163   95
Income from continuing operations before income taxes 87,296 93,408 (7 )
Provision for income taxes   31,000       37,000   (16 )
Income from continuing operations 56,296 56,408 0
(Loss) income from discontinued operations, net of tax   (25,872 )     37,539  
Net income 30,424 93,947 (68 )
Net (income) loss attributable to noncontrolling interests   (75 )     71  
Net income attributable to The Washington Post Company 30,349 94,018 (68 )
Redeemable preferred stock dividends   (205 )     (222 ) (8 )
Net Income Attributable to The Washington Post Company
Common Stockholders $ 30,144     $ 93,796   (68 )
 
Amounts Attributable to The Washington Post Company
Common Stockholders
Income from continuing operations $ 56,016 $ 56,257 0
(Loss) income from discontinued operations, net of tax   (25,872 )     37,539  
Net income $ 30,144     $ 93,796   (68 )
 
Per Share Information Attributable to The Washington Post Company
Common Stockholders
Basic income per common share from continuing operations $ 7.55 $ 7.58 0
Basic (loss) income per common share from discontinued operations   (3.48 )     5.06  
Basic net income per common share $ 4.07     $ 12.64   (68 )
Basic average number of common shares outstanding   7,231       7,272  
 
Diluted income per common share from continuing operations $ 7.53 $ 7.58 0
Diluted (loss) income per common share from discontinued operations   (3.48 )     5.06  
Diluted net income per common share $ 4.05     $ 12.64   (68 )
Diluted average number of common shares outstanding   7,337       7,376  
 
 
THE WASHINGTON POST COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
       
Nine Months Ended
September 30, %
(in thousands, except per share amounts)   2013     2012       Change
Operating revenues $ 2,628,915 $ 2,559,679 3
Operating expenses (2,205,663 ) (2,173,891 ) 1
Depreciation of property, plant and equipment (173,344 ) (170,347 ) 2
Amortization of intangible assets   (9,867 )     (13,336 ) (26 )
Operating income 240,041 202,105 19
Equity in earnings of affiliates, net 13,178 11,301 17
Interest income 1,674 2,492 (33 )
Interest expense (27,229 ) (26,880 ) 1
Other (expense) income, net   (8,831 )     12,116  
Income from continuing operations before income taxes 218,833 201,134 9
Provision for income taxes   83,300       78,100   7
Income from continuing operations 135,533 123,034 10
(Loss) income from discontinued operations, net of tax   (54,716 )     54,528  
Net income 80,817 177,562 (54 )
Net income attributable to noncontrolling interests   (425 )     (10 )
Net income attributable to The Washington Post Company 80,392 177,552 (55 )
Redeemable preferred stock dividends   (855 )     (895 ) (4 )
Net Income Attributable to The Washington Post Company
Common Stockholders $ 79,537     $ 176,657   (55 )
 
Amounts Attributable to The Washington Post Company
Common Stockholders
Income from continuing operations $ 134,253 $ 122,129 10
(Loss) income from discontinued operations, net of tax   (54,716 )     54,528  
Net income $ 79,537     $ 176,657   (55 )
 
Per Share Information Attributable to The Washington Post Company
Common Stockholders
Basic income per common share from continuing operations $ 18.09 $ 16.17 12
Basic (loss) income per common share from discontinued operations   (7.37 )     7.22  
Basic net income per common share $ 10.72     $ 23.39   (54 )
Basic average number of common shares outstanding   7,229       7,405  
 
Diluted income per common share from continuing operations $ 18.07 $ 16.17 12
Diluted (loss) income per common share from discontinued operations   (7.37 )     7.22  
Diluted net income per common share $ 10.70     $ 23.39   (54 )
Diluted average number of common shares outstanding   7,316       7,508  
 
 
 
THE WASHINGTON POST COMPANY

BUSINESS SEGMENT INFORMATION

(Unaudited)
         
Three Months Ended Nine Months Ended
September 30, % September 30, %
(in thousands)   2013   2012   Change 2013   2012  

Change

Operating Revenues
Education $ 546,452 $ 551,696 (1 ) $ 1,622,497 $ 1,650,155 (2 )
Cable television 202,381 199,625 1 607,069 585,414 4
Television broadcasting 87,063 106,411 (18 ) 271,653 283,499 (4 )
Other businesses 66,632 20,187 128,018 41,182
Corporate office
Intersegment elimination   (49 )     (282 )   (322 )     (571 )
$ 902,479     $ 877,637   3 $ 2,628,915     $ 2,559,679   3
Operating Expenses
Education $ 529,417 $ 537,003 (1 ) $ 1,585,792 $ 1,643,649 (4 )
Cable television 162,666 159,712 2 486,031 474,278 2
Television broadcasting 50,759 52,329 (3 ) 152,283 154,690 (2 )
Other businesses 71,678 27,511 147,574 64,257
Corporate office 6,135 8,128 (25 ) 17,516 21,271 (18 )
Intersegment elimination   (49 )     (282 )   (322 )     (571 )
$ 820,606     $ 784,401   5 $ 2,388,874     $ 2,357,574   1
Operating Income (Loss)
Education $ 17,035 $ 14,693 16 $ 36,705 $ 6,506
Cable television 39,715 39,913 0 121,038 111,136 9
Television broadcasting 36,304 54,082 (33 ) 119,370 128,809 (7 )
Other businesses (5,046 ) (7,324 ) 31 (19,556 ) (23,075 ) 15
Corporate office   (6,135 )     (8,128 ) 25   (17,516 )     (21,271 ) 18
$ 81,873     $ 93,236   (12 ) $ 240,041     $ 202,105   19
Depreciation
Education $ 18,978 $ 22,024 (14 ) $ 61,630 $ 63,752 (3 )
Cable television 32,946 32,310 2 100,643 96,741 4
Television broadcasting 3,109 3,126 (1 ) 9,405 9,473 (1 )
Other businesses 555 128 1,561 381
Corporate office   45         105      
$ 55,633     $ 57,588   (3 ) $ 173,344     $ 170,347   2
Amortization of Intangible Assets
Education $ 2,287 $ 4,489 (49 ) $ 7,168 $ 11,528 (38 )
Cable television 61 52 17 168 159 6
Television broadcasting
Other businesses 489 549 (11 ) 2,531 1,649 53
Corporate office            
$ 2,837     $ 5,090   (44 ) $ 9,867     $ 13,336   (26 )
Pension Expense (Credit)
Education $ 4,169 $ 3,522 18 $ 12,506 $ 7,883 59
Cable television 973 694 40 2,768 1,738 59
Television broadcasting 1,251 1,432 (13 ) 3,752 3,447 9
Other businesses 173 45 423 114
Corporate office   (9,299 )     (6,827 ) 36   (27,549 )     (21,159 ) 30
$ (2,733 )   $ (1,134 ) $ (8,100 )   $ (7,977 ) (2 )
 
 
THE WASHINGTON POST COMPANY

EDUCATION DIVISION INFORMATION

(Unaudited)
 
  Three Months Ended   Nine Months Ended  
September 30, % September 30, %
(in thousands)   2013   2012   Change 2013   2012   Change
Operating Revenues    
Higher education $ 266,061 $ 273,703 (3 ) $ 811,013 $ 872,948 (7 )
Test preparation 77,431 81,151 (5 ) 232,064 223,767 4
Kaplan international 201,305 194,158 4 574,086 546,862 5
Kaplan corporate 2,223 3,809 (42 ) 6,496 10,283 (37 )
Intersegment elimination   (568 )     (1,125 )   (1,162 )     (3,705 )
$ 546,452     $ 551,696   (1 ) $ 1,622,497     $ 1,650,155   (2 )
Operating Expenses
Higher education $ 251,342 $ 272,193 (8 ) $ 768,659 $ 856,619 (10 )
Test preparation 73,611 77,705 (5 ) 224,758 227,834 (1 )
Kaplan international 189,285 173,793 9 549,179 512,569 7
Kaplan corporate 13,616 10,172 34 37,571 39,383 (5 )
Amortization of intangible assets 2,287 4,489 (49 ) 7,168 11,528 (38 )
Intersegment elimination   (724 )     (1,349 )   (1,543 )     (4,284 )
$ 529,417     $ 537,003   (1 ) $ 1,585,792     $ 1,643,649   (4 )
Operating Income (Loss)
Higher education $ 14,719 $ 1,510 $ 42,354 $ 16,329
Test preparation 3,820 3,446 11 7,306 (4,067 )
Kaplan international 12,020 20,365 (41 ) 24,907 34,293 (27 )
Kaplan corporate (11,393 ) (6,363 ) (79 ) (31,075 ) (29,100 ) (7 )
Amortization of intangible assets (2,287 ) (4,489 ) 49 (7,168 ) (11,528 ) 38
Intersegment elimination   156       224     381       579  
$ 17,035     $ 14,693   16 $ 36,705     $ 6,506  
Depreciation
Higher education $ 9,739 $ 12,168 (20 ) $ 33,919 $ 35,598 (5 )
Test preparation 5,034 5,544 (9 ) 14,658 14,308 2
Kaplan international 3,903 3,841 2 12,015 12,490 (4 )
Kaplan corporate   302       471   (36 )   1,038       1,356   (23 )
$ 18,978     $ 22,024   (14 ) $ 61,630     $ 63,752   (3 )
Pension Expense
Higher education $ 3,201 $ 2,234 43 $ 8,815 $ 5,408 63
Test preparation 731 554 32 2,012 1,381 46
Kaplan international 99 112 (12 ) 273 113
Kaplan corporate   138       622   (78 )   1,406       981   43
$ 4,169     $ 3,522   18 $ 12,506     $ 7,883   59
 

NON-GAAP FINANCIAL INFORMATION
THE WASHINGTON POST COMPANY
(Unaudited)

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP) included in this press release, the Company has provided information regarding income from continuing operations, excluding certain items described below, reconciled to the most directly comparable GAAP measures. Management believes these non-GAAP measures, when read in conjunction with the Company‘s GAAP financials, provide useful information to investors by offering:

  • the ability to make meaningful period-to-period comparisons of the Company's ongoing results;
  • the ability to identify trends in the Company's underlying business; and
  • a better understanding of how management plans and measures the Company's underlying business.

Income from continuing operations, excluding certain items, should not be considered substitutes or alternatives to computations calculated in accordance with and required by GAAP. These non-GAAP financial measures should be read only in conjunction with financial information presented on a GAAP basis.

The following table reconciles the non-GAAP financial measures to the most directly comparable GAAP measures:

  Three Months Ended   Nine Months Ended
September 30, September 30,
(in thousands, except per share amounts)   2013   2012   2013   2012
   

Amounts attributable to The Washington Post Company common stockholders

Income from continuing operations, as reported $ 56,016     $ 56,257     $ 134,253   $ 122,129  
Adjustments:
Severance and restructuring charges 3,064 2,695 13,073 5,788
Gain on sale of a cost method investment (3,657 )
Foreign currency loss (gain)   (5,047 )     (1,928 )     5,984     (1,997 )
Income from continuing operations, adjusted (non-GAAP) $ 54,033     $ 57,024     $ 153,310   $ 122,263  
 
Per share information attributable to The Washington
Post Company common stockholders

Diluted income per common share from continuing operations, as reported

$ 7.53     $ 7.58     $ 18.07   $ 16.17  
Adjustments:
Severance and restructuring charges 0.42 0.37 1.79 0.78
Gain on sale of a cost method investment (0.48 )
Foreign currency loss (gain)   (0.69 )     (0.26 )     0.83     (0.27 )

Diluted income per common share from continuing operations, adjusted (non-GAAP)

$ 7.26     $ 7.69     $ 20.69   $ 16.20  
 
The adjusted diluted per share amounts may not compute due to rounding.
 

The Washington Post Company
Hal S. Jones, 202-334-6645

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